Question

Study the table below.

Day Stock Price
June 1st $40
September 1st $56
December 31st $47
Johan buys Quality Value Inc. stock at $45 a share on January 1st. On which date could he sell the stock for a capital gain?
A.
September 1st only
B.
December 31st only
C.
September 1 or December 31st
D.
June 1st or December 31st

Answer 1

Study the table below.

Day Stock Price
June 1st $40
September 1st $56
December 31st $47
Johan buys Quality Value Inc. stock at $45 a share on January 1st. On which date could he sell the stock for a capital gain?
A.
September 1st only
B.
December 31st only
C.
September 1 or December 31st
D.
June 1st or December 31st

A

Answer 2

A. September 1st only.

Explanation:

This question is based on assumptions.

Assumption 1st: Lets assume that the share was purchased on 1st January and all the other dates are also from the same year.

Assumption 2: In actual, the capital gain will be incurred if the share is sold on 1st September for $56. The gain will be of
`56-45=11` dollars.

But if we sell the share on 31st December, then also we are gaining $2.

So, both can be the answer. September 1 or December 31st. But let us assume that the share was sold for maximum gain, then the answer will be option A.

Moreover it depends from person to person who is willing to sell in September or in December.

But technically it can be only September as it has maximum gain.